Key Moments
- USD/IDR trades near 17,770 in Asian hours after two straight sessions of declines. However, the Rupiah now faces renewed pressure.
- The Federal Reserve is expected to hold rates at 3.50%–3.75%. In addition, markets expect a hawkish tone from Chair Kevin Warsh.
- Bank Indonesia is also expected to maintain a hawkish bias on Thursday. This comes as FX reserves continue to decline.
Fed Caution Pushes USD/IDR Higher
USD/IDR rose during Asian trading on Wednesday. It hovered near 17,770 after two sessions of losses.
However, the Rupiah weakened again as traders turned cautious ahead of the Federal Reserve decision.
The Fed is widely expected to keep rates unchanged at 3.50%–3.75%. Therefore, investors focus on the policy message rather than the rate itself.
Markets also watch Chair Kevin Warsh closely. Many expect a more hawkish tone at his first meeting.
| Event | Market View |
|---|---|
| Fed policy rate | Expected to stay at 3.50%–3.75% |
| USD/IDR | Around 17,770 |
| Bank Indonesia stance | Expected hawkish bias |
Geopolitics Limit Further USD/IDR Gains
Risk sentiment improved slightly as US–Iran peace hopes increased. As a result, demand for safe-haven assets eased.
US Vice President JD Vance said a preliminary peace framework could arrive soon. Meanwhile, earlier remarks from President Donald Trump suggested progress on a deal.
In addition, Iranian Foreign Minister Seyed Abbas Araghchi confirmed that new talks will take place in Switzerland. These developments support a more stable risk environment.
However, uncertainty still remains, so traders stay cautious.
Bank Indonesia Faces Reserve Pressure
Foreign exchange reserves continue to decline. Therefore, Bank Indonesia faces more pressure to stabilize the Rupiah.
Despite this, markets still expect a hawkish stance at Thursday’s policy meeting. The central bank may tighten policy to support currency stability.
Risk Sentiment Explained
Risk-On vs Risk-Off
Markets often move based on risk sentiment. In a “risk-on” phase, investors buy riskier assets. In contrast, they prefer safer assets in “risk-off” conditions.
What Moves in Each Environment
In risk-on periods, equities and commodities often rise. In addition, commodity-linked currencies tend to strengthen.
In risk-off periods, investors buy safe-haven assets. Therefore, gold, government bonds, and safe-haven currencies usually gain.
Currency Reactions
Risk-on conditions often support AUD, NZD, and CAD. These currencies benefit from global growth optimism.
However, risk-off conditions tend to boost USD, JPY, and CHF. These currencies attract demand during uncertainty because investors seek safety.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
